OPEN - HEALTH AFF - INFO 1-1 REV 3

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1 OPEN - HEALTH AFF - INFO 1-1 REV 3 1

2 2016 MU Health Strategic Planning Retreat OPEN - HEALTH AFF - INFO 1-2 REV 3 2

3 Mizzou Biojoint 15 states and 3 countries OPEN - HEALTH AFF - INFO 1-3 REV 3 3

4 FY10 to FY15 Inpatient Discharge Trends Discharges for patients who reside in MISSOURI Discharges for patients who reside in MUHC S SA Discharges for MU Health Care 7.0 % % 20.9% OPEN - HEALTH AFF - INFO 1-4 REV 3 4

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10 Financial Performance June 2016 Preliminary Unaudited YTD Actual YTD Budget MU HEALTH CARE CONSOLIDATED Prior Year Actual FY16 Annual Budget Moody's A Rated Summary of Financial Statement ($000s) $839,951 $786,938 Net Revenues $789,220 $786,938 (766,483) (762,755) Operating Expenses* (730,897) (762,755) (29,293) (3,076) Non-operating Rev/Exp, Net (36,194) (3,076) $44,175 $21,107 Change in Net Assets $22,129 $21,107 *Includes University purchased clinical services annual budget of $42.6 million Days Cash on Hand Net Days Revenue in AR (excluding MRC) OPEN - HEALTH AFF - INFO 1-10 REV 3 10

11 Fiscal Year Revenues in Millions Revenue Growth % Operating Margin* 2016 $ % 8.75% 2015 $ % 8.03% 2014 $ % 5.23% 2013 $ % 6.21% 2012 $ % *Moody s Aa rated operating margin for 2016 was 5.0% and Median was 3.4% OPEN - HEALTH AFF - INFO 1-11 REV 3 11

12 Metric Actual Goal Plan Hospital-Patient Satisfaction Physician Clinic-Patient Satisfaction 62 nd Percentile 30 th Percentile 75 th+ PDSA Projects 75 th+ Changes to MD Compensation Plan/Training Mortality Better than target, average is 1.0 Readmissions 12.93% 11.94% PDSA Projects, prior year 13.03% OPEN - HEALTH AFF - INFO 1-12 REV 3 12

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14 CHART Total Hospital Discharges 4 Benchmarked against Participating Teaching Hospitals Twelve Most Recent Quarters University of Missouri Hospitals and Clinics 12,000 10,000 8,000 6,000 Your Hospital 4,000 75th Percentile 2,000 50th Percentile 25th Percentile Q Q Q Q Q Q Q Q Q Q Q Q1 Source: AAMC COTH Quarterly Survey of Hospital Operations & Financial Performance Total Hospital Discharges is native to the survey AAMC. All rights reserved. OPEN - HEALTH AFF - INFO 1-14 REV 3 14

15 CHART Wage and CMI Standardized Expense per Adjusted Discharge 12 Benchmarked against Participating Teaching Hospitals Twelve Most Recent Quarters University of Missouri Hospitals and Clinics $12,000 $10,000 $8,000 $6,000 Your Hospital $4,000 75th Percentile $2,000 50th Percentile 25th Percentile $ Q Q Q Q Q Q Q Q Q Q Q Q1 Source: AAMC COTH Quarterly Survey of Hospital Operations & Financial Performance Wage and CMI Standardized Expense per Adjusted Discharge = (((Total Operating Expenses-Total Other Operating Revenue)*(Gross Inpatient Revenue/Total Gross Revenue))/Total Discharge)/Area Wage Index from CMS PPS Impact File/Overall Hospital Case Mix Index OPEN - HEALTH AFF - INFO 1-15 REV 3 15

16 CHART CMI Adjusted Hospital Price per Discharge 18 Benchmarked against Participating Teaching Hospitals Twelve Most Recent Quarters University of Missouri Hospitals and Clinics $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 Your Hospital $15,000 75th Percentile $10,000 50th Percentile $5,000 25th Percentile $ Q Q Q Q Q Q Q Q Q Q Q Q1 Source: AAMC COTH Quarterly Survey of Hospital Operations & Financial Performance CMI Adjusted Hospital Price per Discharge = (Inpatient Gross Revenue / Total Discharges)/Overall Hospital Case Mix Index OPEN - HEALTH AFF - INFO 1-16 REV 3 16

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18 $10,000,000 University of Missouri Health Care & University Physicians Current and Proposed Financial Impact/Risks in Reimbursement (Govt Only) $- $(10,000,000) $2,023,214 $1,272,908 $419,144 $381,702 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 $(619,014) $(3,078,725) $(7,357,880) $(11,040,498) $(16,326,124) $(1,516,846) $(20,000,000) $(30,000,000) $(45,094,939) $(48,008,388) $(52,786,730) $(54,529,169) $(56,145,155) $(40,000,000) $(50,000,000) $(5,961,594) $(6,068,268) $(60,000,000) $(6,177,075) $(6,288,059) $(6,401,262) $(70,000,000) MUHC UP OPEN - HEALTH AFF - INFO 1-18 REV 3 18

19 30% Growth OPEN - HEALTH AFF - INFO 1-19 REV 3 19

20 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Other System Campus SOM $ P *36% Growth in Payments in 5 years OPEN - HEALTH AFF - INFO 1-20 REV 3 20

21 Funds Flow Initiative March 24, OPEN - HEALTH AFF - INFO 1-21 REV 3

22 Participation 55 Participants Since FY 2010 Arizona Iowa Rush UMass Barnes Jewish JHMI RWJUH UMDNJ Bayview Kansas Stony Brook UNC Brigham Louisville SUNY UNM Case Maryland TJUH U of R Cedars Sinai Chicago Cincinnati Colorado Duke ECU Fairview Fletcher Allen Froedtert Memorial Hermann Michigan Missouri MUSC Northwestern OHSU OSU Penn RIH Truman Tufts UAB UAMS UCI UCLA UCSD UCSF UK Utah UTMB UVA VCU Washington Wisconsin WVU Yale 22 OPEN - HEALTH AFF - INFO 1-22 REV 3

23 School of Medicine Support as a % of 2014 Net Patient Revenue 16% 14% 12% 10% 8% 6% 4% 2% Vizient Range: 2.2% to 14.2% Vizient Average: 8.9% MU Health Care MU Health Care 2015: 13.2% MU Health Care 2016: 12.9% Average = 8.9% 0% Participants 23 OPEN - HEALTH AFF - INFO 1-23 REV 3

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25 Boone Hospital Center RFP submitted June 30, 2016 Could potentially move to a second round of proposals BJC Lease ends in 2020 with notice to be given in 2018 Destination Medical Community with local control OPEN - HEALTH AFF - INFO 1-25 REV 3 25

26 Changing reimbursement and care models Reimbursement changes Bundled payments Value based care: lower utilization and higher quality in narrow networks High deductible plans New Care Models Care mngt of high risk populations: the 15% that make up 80% of the cost Care moves to lower cost settings: Home visits/hosp at home/e-visits Financially at risk populations/$53m charity care Post acute Care Partnership Patient Portals: on-line scheduling and visits OPEN - HEALTH AFF - INFO 1-26 REV 3

27 Changes in our Staff Engagement Strategy to decrease burnout OPEN - HEALTH AFF - INFO 1-27 REV 3 27

28 Doubling Down on Culture OPEN - HEALTH AFF - INFO 1-28 REV 3 28

29 The Culture of Yes Together we: Care, Deliver, Innovate and Serve VALUES BEHAVIORS The difference between Pros and Amateurs 10/5 Rule Say Do Ratio 1:1 1) Warm Welcome 2) Anticipate Needs 3) Fond Farewell Big Impact and Small Wake Everything you need, but nothing more Innovation finds a way No Public Venting Is there anything I can do for you? I have the time. OPEN - HEALTH AFF - INFO 1-29 REV 3 29

30 In a rapidly changing industry, frequent communication to employees is key Monthly rounding Communication stations Daily updates Staff meetings Qrt leadership mtgs Social media OPEN - HEALTH AFF - INFO 1-30 REV 3

31 Year Employee Engagement Percentile Score 2016* 60 th nd th th th One of the largest increases Press Ganey had seen in one year. Began the Culture of Yes *In 2016 we moved to the Gallup engagement survey. We achieved 60 th percentile for a first time user of the survey and 35 th overall. Prior to this we were on the Press Ganey survey which has a more favorable compare group. Goal is upper quartile at 75 th OPEN - HEALTH AFF - INFO 1-31 REV 3 31

32 70 Percent of Performance Evaluations either make performance worse or show no improvement* *A. Kluger and A. Denisi meta analysis of 607 studies OPEN - HEALTH AFF - INFO 1-32 REV 3 32

33 Performance Evaluations Impact on Deliver Rating, Pay Adjustment, Bonus Jan Feb Engagement Mar Apr May Jun Jul Aug Sep Oct Nov Dec % 85% 2 OPEN - HEALTH AFF - INFO 1-33 REV 3 Illustrative 33

34 BWHAT WOULD HAPPEN IF A focus on weaknesses prevents failure. A focus on strengths leads to excellence. Average reader Above-average reader 2,900 Words Per Minute OPEN - HEALTH AFF - INFO 1-34 REV 3 Copyright 2012 Gallup, Inc. All rights reserved First Second Time Time 350 First Second Time Time 34 1

35 FOCUSING ON STRENGTHS IMPACT ENGAGEMENT INCREASES WHEN MANAGERS FOCUS ON EMPLOYEES STRENGTHS OPEN - HEALTH AFF - INFO 1-35 REV 3 63

36 Quarterly GROW Conversations G: Goals R: Results O: On-track/Off-track W: Way forward OPEN - HEALTH AFF - INFO 1-36 REV 3 36

37 Questions? OPEN - HEALTH AFF - INFO 1-37 REV 3 37